Chicago aldermen endorse higher phone fees

Nancy Stone, Chicago Tribune

Alderman talk before the start of the finance committee meeting. With a solid majority of the 50 aldermen signed on -- and Mayor Rahm Emanuel backing it -- the effort to increase the 911 fee by Oct. 1 is on track to win full council approval.

Alderman talk before the start of the finance committee meeting. With a solid majority of the 50 aldermen signed on -- and Mayor Rahm Emanuel backing it -- the effort to increase the 911 fee by Oct. 1 is on track to win full council approval. (Nancy Stone, Chicago Tribune)

Hal DardickTribune reporter

Everyone with a phone billed to a Chicago address would be hit with a 911 fee increase by Oct. 1 under a measure the City Council Finance Committee endorsed Tuesday.

With a solid majority of the 50 aldermen signed on — and Mayor Rahm Emanuel backing it — the measure is on track to win full council approval on Wednesday.

There’s momentum even though the fee hike will hit nearly all Chicago residents just months before the February city elections. That’s because the money is designed to stave off what elected officials view as the politically fatal third rail of Illinois politics: a property tax increase.

The increase would boost 911 surcharges on wireless phones and landlines by $1.40 — to $3.90 a line — starting Sept. 1. It also would increase the tax on pre-paid wireless phones by 2 percentage points, to 9 percent, on Oct. 1. The move will raise 911 fees by $16.80 per year — or $67.20 a year for a family with four phone lines.

The fee hike is expected to raise about $10 million this year and another $40 million next year, Budget Director Alexandra Holt said. That would allow the city to free up $50 million in general revenue now dedicated to the 911 system and emergency preparedness.

That’s about the same amount Emanuel had planned to raise from higher property taxes in next year’s budget to help cover increased city payments into two retirement funds, as required under city pension changes that Gov. Pat Quinn signed into law in June.

When the governor signed the pension bill, Emanuel pulled next year’s proposed property tax increase off the table, saying the 911 fee would make it unnecessary. But increases of $50 million a year in the following four years are still possible as the pension obligations ramp up, the mayor has acknowledged.

Each $50 million property tax increase would boost the property taxes on a home valued at $250,000 — the city’s median home value — about $50 a year.

Some argue that the phone surcharge is a more regressive way to raise money because it would hit everyone with phones equally, regardless of whether they’re renters or owners of homes with lower values. And in many cases, the owner of a median value home would end up paying more than if the city raised property taxes.

“It would maybe pan out to be a little bit more, but I think it would be more feasible to handle monthly than it would all at once,” said Ald. Carrie Austin, 34th, chairman of the council Budget Committee. “It may not be as much pain monthly, as it would be at one time.”

If the council approves the ordinance as expected Wednesday, it would come a day or two before the mayor releases his budget projections, and any projected shortfall, for next year.